A payday lender charges $16.50 for each $100 borrowed. Suppose someone borrows $500 for 18 days. What is the annual simple interest rate (in percent) for the borrowers? (Use 360 days in 1 year.)
To calculate the interest paid for borrowing $500 for 18 days at a rate of $16.50 for each $100 borrowed, we first need to determine how many times $16.50 occurs in $500.
$500 / $100 = 5
Therefore, the total interest paid for borrowing $500 would be:
$16.50 x 5 = $82.50
Next, we can calculate the daily interest rate:
$82.50 / 18 = $4.5833
To find the annual interest rate, we multiply the daily interest rate by the number of days in a year:
$4.5833 x 360 = $1650
Finally, we convert this amount to a percentage:
$1650 / $500 = 330%
Therefore, the annual simple interest rate for the borrowers is 330%.